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Tuesday, Oct 3, 2023

Phoenix Motor Slims Down IPO

ELECTRIC VEHICLES: $20M raise planned, new underwriters

Anaheim’s Phoenix Motor Inc., a maker of electric-powered passenger vans, school buses and heavy-duty pickup trucks, has revised and scaled back plans for its initial public offering.

The upstart EV maker, a unit of Santa Clara-based SPI Energy (Nasdaq: SPI), recently disclosed in regulatory filings plans to raise $20 million by offering 2.5 million shares at around $8 a share.

Such a listing would raise net proceeds of about $18.2 million for Phoenix, with China-backed SPI maintaining a roughly 88% stake in the Anaheim company, which would be valued around $160 million and trade on the Nasdaq under the “PEV” ticker symbol.

Downsized Plans

Phoenix’s first batch of filings with the Securities and Exchange Commission pertaining to the IPO, made public in late 2021, suggested the company intended to raise upward of $150 million, though specific details and a valuation for the company was not estimated at the time.

Earlier this year, the company’s terms of the IPO were revised, and filings from a few months ago indicated plans to raise more than $45 million, via a combination of 4 million common shares of stock plus additional warrants. That version of the IPO would have valued Phoenix at more than $350 million.

The current iteration of the IPO removes the warrant aspect of the offering, and cut the number of common shares to be sold to 2.5 million. Phoenix’s proposed valuation is less than half of what it expected a few months ago.

The IPO’s underwriters have changed over the course of 2022.

Newport Beach’s Roth Capital, along with Maxim Group and EF Hutton, were previously the underwriters for the deal, but aren’t involved anymore.

New York’s Prime Number Capital, which is known for advising Asian corporate clients, is now the sole bookrunner for the IPO, according to regulatory filings.

CEO Switch

The IPO revisions aren’t the only changes taking place at Phoenix Motor of late.

About two months ago, Phoenix hired as CEO Lance Zhou, the former chief executive of Irvine luxury electric vehicle maker Karma Automotive Inc.

Zhou “is a tremendous addition to our team, and his experience and resources will help Phoenix Motorcars expand to the next level as it grows operations globally,” said Xiaofeng Denton Peng, chairman and CEO of SPI Energy, at the time of the hiring.

SPI Energy is a nearly $55 million-valued solar energy and EV-focused firm with ties to China that bought Phoenix last year and subsequently invested $17 million into the business.

Going Concern

Funds from the IPO appear needed. Paperwork for the IPO indicates that as of Dec. 31, Phoenix had cash and cash equivalents of $2.7 million.

The company reported sales of about $3 million in 2021 with a net loss of $14.6 million for the year. It reported burning through $12.9 million in cash last year.

“These conditions raise substantial doubt about our ability to continue as a going concern,” the company said in a SEC filing in May.

The company last year moved from Ontario to an Anaheim facility it believes has the capability of producing up to 120 vehicles annually with one manufacturing shift and 240 vehicles a year with two shifts per day.

Along with electric-powered passenger vans, school buses and cargo trucks, the company also makes utility trucks, service trucks, flatbed trucks, and walk-in vans.

Its customer roster includes cities, transportation agencies, campuses, hotel chains, airport shuttle companies, last-mile delivery and other fleet users.

Its existing fleet of EVs have a maximum range of 160 miles and minimum recharging time of five to six hours, according to regulatory filings.

Future on Hold?

While the vehicles it currently makes look similar to existing gas-powered vans and trucks, the company said it is in the design phase for a fleet of more futuristic-looking consumer-focused vehicles.

The company’s consumer EV affiliate EdisonFuture Motor Inc. of Santa Clara revealed the EdisonFuture EF-1 pickup truck and EF-1 V van at last year’s LA Auto Show, with hopes for a 2025 release.

These vehicles promise solar-powered roofs that can charge the vehicles while in use or parked during the day.

The next-gen plans could be put on hold, depending on the success of the IPO.

Regulatory filings from May indicate that Phoenix is looking to reducing expenses that will not generate cash in the short term, among other cost-cutting measures.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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